Financial Management:

Status of BIA's Efforts to Reconcile Indian Trust Fund Accounts and Implement Management Improvements

T-AIMD-94-99: Published: Apr 12, 1994. Publicly Released: Apr 12, 1994.

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GAO discussed the Bureau of Indian Affairs' (BIA) trust fund management, focusing on BIA efforts to: (1) reconcile its trust fund accounts; and (2) improve trust fund management. GAO noted that: (1) although the Department of the Interior and BIA have made progress toward improving trust fund management, long-standing management problems have impeded BIA ability to maintain proper control and accountability over individual Indian monies (IIM) accounts; (2) BIA progress in reconciling trust fund accounts and obtaining independent certification has been slow; (3) BIA reconciliation and certification contractors have nearly completed the first of eight major tribal reconciliations; (4) the Indian community has expressed concern over BIA trust fund accounting and the effectiveness of BIA investment practices; (5) BIA trust fund account balances lack credibility because BIA trust funds have never been properly reconciled and internal control systems are unreliable; (6) BIA continues to lack adequate strategic planning, staff and training, trust fund management policies and procedures, and accounting and reporting systems; and (7) Interior and BIA need to reevaluate Indian Trust Fund program objectives and management principles so that individual accounts can be timely reconciled, certified, and resolved.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: The Secretary of the Interior should direct the Assistant Secretary for Indian Affairs to improve the BIA trust fund reconciliation and certification effort by developing reconciliation procedures which provide reasonable assurance that earned revenues were billed and collected, such as using leases to identify billable amounts and then tracing these amounts to receipts.

    Agency Affected: Department of the Interior

    Status: Closed - Not Implemented

    Comments: Interior responded that leases could not be used as a reconciliation starting point because most of the these documents were missing. GAO told BIA and Interior management that without this documentation they could not meet their reconciliation objective to ensure that earned revenues were collected and that account balances were accurate.

    Recommendation: The Secretary of the Interior should direct the Assistant Secretary for Indian Affairs to improve the BIA trust fund reconciliation and certification effort by using billing data identified from leases under BIA revised reconciliation procedures on revenue collections as a basis for developing an accounts receivable system.

    Agency Affected: Department of the Interior

    Status: Closed - Not Implemented

    Comments: BIA's trust fund reconciliation and certification effort has been finished and an accounts receivable system has not been developed. In April 1997, the Special Trustee for American Indians released his strategic plan to implement the reforms required by the American Indian Trust Fund Management Reform Act of 1994. That plan calls for a "Trust Asset and Accounting Management System in the style of a private sector trust operation," and is to include an accounts receivable/master lease subsystem. In addition, in April 1997, the Individual Indian Monies (IIM) class plaintiffs filed for interim relief with the Federal District Court in Washington, D.C. to require Interior to develop a master lease system and acquire an accounts receivable system. OTFM is implementing an accounts receivable subsystem that is projected to come online in October 1997; the master lease subsystem is BIA's responsibility.

    Recommendation: The Secretary of the Interior should direct the Assistant Secretary for Indian Affairs to improve the BIA trust fund reconciliation and certification effort by obtaining account holder comments on alternatives to reconciling individual Indian monies accounts for the purpose of selecting the most viable alternative.

    Agency Affected: Department of the Interior

    Status: Closed - Not Implemented

    Comments: BIA's trust fund reconciliation and certification effort has been finished and the effort did not address IIM accounts because of prohibitive costs and difficulties in locating needed records. IIM account balances are now the subject of litigation as the result of a lawsuit that was filed on behalf of all IIM account holders.

    Recommendation: The Secretary of the Interior should direct the Assistant Secretary for Indian Affairs to implement Office of Trust Funds Management (OTFM) approved plans for staffing and organization, an interim trust fund system, and investment services by: (1) expediting the OTFM hiring process; (2) expeditiously issuing OTFM solicitations to potential vendors for trust fund system proposals so that a vendor is selected as planned; and (3) obtaining account holder input on investment advisors that BIA plans to select.

    Agency Affected: Department of the Interior

    Status: Closed - Implemented

    Comments: BIA's FY 1994 appropriation approved a total of 107 positions for OTFM, and in May 1997, 103 of the 107 were filled, and the last key position--Division Chief for Quality Assurance--had been advertised. In April 1995, OTFM implemented an interim core general ledger and investment accounting system for Indian trust funds. In April 1997, the Special Trustee for American Indians released his strategic plan that calls for the purchase and upgrade of hardware and software to support the proposed Trust Asset and Accounting System "in the style of a private sector trust operation." OTFM has not obtained account holder input for an investment advisor contract because budget limitations have precluded OTFM's contracting for investment advisor services. Instead, in January 1997, OTFM hired 2 new economists to enhance its in-house investment expertise. OTFM also contracted, in September 1996, for investment securities custodial services.

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